Question

Transferring Vendor Credit to Bank Account

Forum|Forum|5 years ago
June 15, 2021
2 replies
0 views

Hi,

I have an account with a vendor that holds a balance once I receive refunds or other credits from them. I can either use this balance to make purchases or transfer it to my PayPal account which I have set up with QBO.

I have a few transactions in my vendor and PayPal accounts where I've received credit from the vendor and transferred it to my PayPal account. Matching transactions are on both sides.

The transactions are categorized when they are initially credited to me on the vendor side.

How do I account for this? All I need to do is make a transfer of any remaining credit in my vendor account to my PayPal account.

QuickBooks Online

L

LeizylM

Hello, BadCo55.

Let me share some information on how you can manage your PayPal account in QuickBooks Online.

A vendor Credit is used to either record returns to vendors or simply these are refunds from vendors.

Let's make sure to create a Vendor Credit to post it on the expense account you used for this vendor. Then, deposit the money you got from the refund using a Bank Deposit. Lastly, use the Pay Bills option to connect the bank deposit to the Vendor Credit.

Here's how:

Step 1: Enter a vendor credit

This makes sure the credit hits the expense account you use for this vendor.

Select + New.
Select Vendor credit or Receive vendor credit.
In the Vendor dropdown, select your vendor.
Depending on how you record purchases with this vendor, enter the Category details or Item details. Usually, this is the category, product, or service you’re getting a credit for.
Select Save and close.

Step 2: Deposit the money you got from the refund

Select + New.
Select Bank Deposit.
In the Account drop-down menu, select the account where you got the refund.
In the Add funds to this deposit section, fill out the following fields.
- Received from: Select the vendor who gave you a refund.
- Account: Select Accounts Payable. Important: You need to pick Accounts Payable so you can tie the refund to the vendor credit. This may seem a little strange, but it’s the best way to do this.
- Payment method: Enter the method your vendor used to refund you.
- Amount: Enter the amount of your refund.
Select Save and close.

Step 3: Use Pay Bills to connect the bank deposit to the vendor credit

Even though you aren’t paying a bill, this is the right thing to do. This last step is to keep your vendor expenses accurate.

Select + New.
Select Pay Bills.
Select the bank deposit you just created. You’ll see the amount of the vendor credit in the Credit Applied field. The Total payment should be $0.00.
Select Save and close.

Then, you can go to your vendor profile to check for the balance.

For your reference, you'll want to run reports in QuickBooks Online to show the aspects of your business. Here's an article for your guide: Run Reports In QuickBooks Online.

I'll be right here to help you if you have any other questions or concerns with QuickBooks. I'll make sure you're all set. Have a lovely day!

B

BadCo55Author

That's super helpful, thanks for the response.

What if the transactions for the 'deposit' already exist in my transaction history?

JessT

Hello, BadCo55!

I’m glad to hear you found LeizylM’s answer helpful! I'll continue to help you with your additional question.

Since the transaction is already in your history, you can skip Step 2 in LeizylM's answer. Then, edit the transaction in the PayPal history by changing its category to Accounts Payable. Then, perform Step 3 above to link it to the vendor credit.

See also about reconciling an account in QBO for your reference in the future.

Let me know if you have questions as you change the category or link the transactions. Take care and more power to your business.

K

KER1

I have the 2019 edition of QuickBooks, and no I don't want to upgrade! Looking for a walkthrough tutorial or help in applying a credit to my bank account.

R

RhoiceW

Hi there, KER. I understand you don't want to upgrade your QuickBooks Desktop (QBDT) account. You can click the Vendor credit radio button on the billing page of your account. Let me walk you through the process of how to do it.

Firstly, you'll need to record a Bank Deposit and assign it to your Accounts Payable account. This will allow you to link your future or existing bills under the Pay Bills page.

Here's how:

Click on the Banking menu at the top of the screen, then choose Make Deposits.
If the Payments to Deposit window pops up, choose the payment you want to record. Then, click OK.
In the Make Deposits window, use the dropdown menu next to Received From to select the vendor who issued the refund.
From the From Account dropdown, choose the relevant Accounts Payable account.
In the Amount column, input the exact amount of the vendor's check.
Click on Save & Close to finalize the transaction.

Once done, proceed to record a bill for the refund amount in your account.

Here's how:

Go to the Vendors menu and click on Enter Bills.
Choose the Credit option to record the return of goods.
Choose the vendor's name on the dropdown button.
Click on the Expenses tab and enter the accounts referenced in the original bill.
In the Amount column, specify the correct amount for each account.
Once you've completed the entries, click on Save and Close.

Furthermore, if you have a different scenario in recording a vendor credit, you can refer to our article for detailed steps on how to record it.

Additionally, once you’re ready, I recommend reconciling your account to ensure that your records align with your actual bank and credit card statements in QuickBooks. This step is crucial for maintaining accurate financial records.

If you have any more questions or need assistance with managing your vendor credit, don’t hesitate to get in touch. I'm here to help.

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